Calgary - WestJet Airlines reported its best-ever quarterly earnings on Tuesday, but the announcement was tarnished by a sharp drop in stock price caused by investor concerns about the company’s growth plans.

Shares in the Calgary-based airline fell as much as 13 per cent — their biggest dive in more than four years — on the Toronto Stock Exchange, eventually recovering to close down 7.5 percentage points at $22.87.

The slide came after the carrier announced it had posted a record $91.1 million profit in the first quarter, a 33 per cent increase from the first quarter of 2012.

“It’s always disappointing to see the stock price go down when you generate exceptional results — the best ever in our 17-year history,” WestJet CEO Gregg Saretsky told reporters at the airline’s annual general meeting Tuesday afternoon. “But I think the market is maybe a little bit spooked about what’s around the corner — whether the economy’s going to hold and whether or not the capacity we’re adding will be absorbed by the market.”

Jittery investors appeared to be reacting to WestJet’s plans to increase its system capacity — the number of seats it has in the market — by between 9 and 10 per cent in the second quarter, and by 7.5 to 8.5 per cent for all of 2013.

At the same time, WestJet said it expects a “moderate decline” in second-quarter revenue per available seat mile. The company said its load factor — an industry term for how full its planes are — fell 3.5 percentage points April, compared to the same month a year earlier.

Saretsky said WestJet’s costs, including jet fuel, are going down which should offset declines in revenue. He added improving economic conditions in the U.S. will increase the demand for air travel, and said WestJet is highly confident the market can absorb the extra capacity.

“We operated last summer very, very full,” Saretsky said in a conference call with analysts. “Quite frankly if we’d known last summer was going to be that full, we would have added the capacity sooner.”

Saretsky called the April figures a “soft patch,” and said bookings are looking stronger for May and June. He said he expects the company’s second quarter results to also be among its best ever.

However, the numbers had some analysts questioning whether WestJet can meet its own growth projections and still fill its planes without having to drop fares.

“There’s a high degree of anxiety about capacity growth,” said David Tyerman, an analyst at Canaccord Genuity. “This industry has a long bad history of airlines pursuing their own growth agenda which ends up destroying profitability for everybody.”

Robert Kokonis, an independent aviation analyst and founder of airline consulting firm AirTrav Inc., said he believes the market overreacted.

Kokonis said WestJet’s core markets are strong, and the company’s aggressive pursuit of code-share agreements with other airlines is driving traffic throughout its network. He said the launch of Encore, WestJet’s new regional airline, in June will also spur capacity growth.

“We are talking about an airline that has successfully proved its track record of profitability over 32 quarters consecutively. The management team is exceptionally strong,” Kokonis said. “I may be eating humble pie at the end of the year if my optimism about WestJet is overplayed, but I think today the negativity on their stock is massively overplayed.”

WestJet — which is in the midst of a $100 million cost cutting effort to be completed by the end of 2015 — also announced Tuesday its plans to sell 10 of its oldest Boeing 737-700s to an unidentified third party and buy 10 new Boeing 737-800s. The move is part of the company’s plan to modernize and improve the efficiency of its fleet.

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